OSI Pharmaceuticals

(OSIP)

agreed to buy

Eyetech Pharmaceuticals

(EYET)

, a maker of treatments for eye diseases, in a deal valued at $935 million.

On Monday, OSI said it will buy Eyetech for $20 a share in cash and stock, a 43% premium over Eyetech's closing price Aug. 19. OSI will issue about 5.7 million shares and said the merger will create a biopharmaceutical company with more than $600 million of projected revenue in 2006.

Shares of Eyetech were gaining $4.28, or 31%, to $18.27 in premarket trading. OSI was down $7.30, or 18%, to $33.47.

"We believe the proposed transaction will deliver scale to OSI's current business, bring forward profitability and provide for double-digit revenue growth over the next five years," OSI said in a press release. "Moving forward, we anticipate that OSI will be a profitable enterprise with three high-quality business units in the attractive commercial arenas of oncology, eye diseases and diabetes, possess a pipeline of high-quality drug candidates and be led by an experienced and deep management team."

OSI develops pharmaceuticals for cancer and diabetes patients. The company's best-known product is Tarceva, a cancer drug marketed by

Genentech

(DNA)

and

Roche

. Eyetech is known for Macugen, a treatment for an eye condition called age-related macular degeneration.